The Issue Whether the Department of Health and Rehabilitative Services improperly determined the Petitioners' rate of Medicaid reimbursement for the period January 1, 1990, through June 30, 1990?
Findings Of Fact The Emergency Rule and the Permanent Rule have been determined to be valid in a Final Order entered simultaneously with this Recommended Order. The Department's action in freezing the Medicaid reimbursement rate of the Petitioners in these cases was taken pursuant to the Emergency Rule and the Permanent Rule.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order in these cases dismissing the Petitioners' amended petitions. DONE and ENTERED this 26 day of May, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of May, 1992. APPENDIX Case Numbers 91-4893, 91-4894, 91-4895, 91-4914, 91-4929, 91-5837 and 91-6191 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1 and 4. 2 5-6. 3 13. 4 7. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 12. 14 11. 15 24. 16 25-27. 17 28-29. 18 29. 19 30-32. 20 34-37. See 39. The last three sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 39. The last two sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 23 40-41. 24 43. 25 45. 26 46. 27 47. 28 48. The last two sentences are argument. 29 49. 30 42. 31 29 and 32. The weight of the evidence failed to prove the Department's motive for providing assurances to HCFA were anything other than to meet federal requirements. 32 28. 33 55. 34 34-35. See 59-60 and 63. The detailed findings of fact concerning the nature of the Department's inflationary analysis are not necessary. HCFA rejected this analysis and based its decision on other information provided by the Department. Additionally, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 35 See 60-63. 36 52-54. 37 54. 38 55 and hereby accepted. 39 59 and hereby accepted. 40 See 60-65. HCFA did not "reject" the Department's proposed plan amendment. 41 See 63. 42-43 See 60-66. 44-46, 50-54 Although the proposed findings of fact concerning what the Department told HCFA are generally correct, these proposed findings of fact are not relevant to this proceeding. As previously stated, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 47 Hereby accepted. 48-49 Hereby accepted except for the proposed findings that the Department "misled", "misrepresented" or provided "inaccurate and misleading information." The last sentence of proposed finding of fact 49 is not relevant. 55 67. 56 Hereby accepted. 57 Not relevant. 58 69. 59 70. 60 71. 61 50 and 73. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 4. 3 5. 4 6. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 11. 14 24. 15 25-26. 16 Hereby accepted. 17 27 and 29-32. 18 34-37. 19 39-41. 20 41. 21 43. 22 33. 23 42. 24 52-53 and 58. 25 54. 26 55. 27 56. 28 57. 29 60-65. 30 67. 31 68. 32 69. 33 70. 34 71. 35 50 and 73. 36 72. 37 73. 38 Hereby accepted. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Thomas C. Fox, Esquire Michael D. Smith, Esquire 1200 18th Street, N.W. Washington, D.C. 20036 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 W. David Watkins, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 David Pius Medicaid Counsel Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700
The Issue Whether the Dynamic Orthotic Cranioplasty band prescribed to treat Petitioner Anna Leigh Miller's deformational plagiocephaly in 2004 was a covered benefit under the 2004 State Employees' PPO Plan.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the factual stipulations set forth in the parties' August 23, 2005, Pre-Hearing Stipulation3: At all times material to the instant case, Petitioner Leigh Lassiter Miller has been employed by the State Attorney's Office in Palm Beach County. As a benefit of her employment, she has received group health insurance under the State Employees' PPO Plan (Plan). Respondent administers the Plan. It does so with the assistance of Blue Cross and Blue Shield of Florida, Inc. (BCBSF). BCBSF was hired by Respondent to provide medical claim processing services under the Plan. The terms and conditions of the Plan that were in effect during the time period at issue in the instant case are set forth in the 2004 Plan Booklet and Benefits Document (Plan Document). According to the Plan Document's "Introduction," the "PPO plan is designed to cover most major medical expenses for a covered illness or injury, including hospital and physician services." The Plan Document's "Summary of Plan Benefits, Covered Services" advises that the Plan "pays a percentage of the cost of covered care and medical supplies as long as the care or supplies are ordered by a covered provider and are considered medically necessary as a result of a covered accident, illness, condition or mental or nervous disorder." For covered "durable medical equipment" obtained from a "non-network" provider, the percentage paid by the Plan is 60 percent. The "Limitations and Exclusions" portion of the Plan Document contains a listing of "Services Not Covered By The Plan." This listing reads, in pertinent part, as follows: The following services and supplies are excluded from coverage under this health insurance plan unless a specific exception is noted. Exceptions may be subject to certain coverage limitations. Cosmetic surgery or treatment, unless it is: a result of a covered accident and the surgery or treatment is performed while the person is covered by this health insurance plan for correction of a congenital anomaly for an eligible dependent and performed while the dependent is covered by this health insurance plan a medically necessary procedure to correct an abnormal bodily function for reconstruction to an area of the body that has been altered by the treatment of a disease * * * 4. Any services or supplies which are not medically necessary, as determined by BCBSF clinical staff and DSGI. * * * 17. Any services provided for preventative care - except those services provided as part of the well-child health supervision services or those services obtained through the $100 Health Screening benefit (see page 22). * * * 45. Services and procedures considered by BCBSF to be experimental or investigational, or services and procedures not in accordance with generally accepted professional medical standards, including complications resulting from these non-covered services. The Plan Document contains the following description of the process involved in "Appealing A Denied Claim": If your benefit claim is totally or partially denied, BCBSF or Caremark, Inc. will send you a written notice on an Explanation of Benefits (EOB) statement stating the specific reason(s) for the denial within 30 days of receiving your claim. The notice will include a list of any additional information needed to appeal the denial to BCBSF or Caremark, Inc. Appealing To The Third Party Administrator- A Level I Appeal Within 90 days of the date of the EOB denial notice you or your authorized representative can appeal a claim that is denied. Your appeal must be in writing and should include any information, questions or comments you think are appropriate. Mail your written appeal to the third party administrator- BCBSF for medical claims or Caremark, Inc. for prescription drug claims - at the address shown on the inside cover of this booklet. The third party administrator will review your claim and provide you with a written notice of the review decision. On the notice, you will also receive information about appealing the decision to DSGI. Appealing To DSGI - A Level II Appeal If you are not satisfied with the first appeal decision given by the third party administrator, you may make a second appeal through DSGI. After you have asked the third party administrator to review your claim and you have received their written notification, you may submit a second appeal to DSGI. Your Level II Appeal must be in writing and must be received by DSGI not later than 60 days after the date of the written notice of the third party administrator decision regarding your Level I Appeal and must include: a copy of the EOB a copy of your letter requesting the third party administrator to review the claim a copy of the third party administrator's written notice of their review decision a letter to DSGI appealing the decision, and any other information or documentation you think is appropriate. Mail your written DSGI at the address shown on page 1. Send your appeal to the attention of the "Appeals Coordinator." Requesting An Administrative Hearing If you want to contest the second appeal decision, you must submit a petition for an administrative proceeding that complies with section 28-106.301, Florida Administrative Code. DSGI must receive your petition within 21 days after you received the written decision on your second appeal. "Definitions Of Selected Terms Used By The Plan" are found on pages 49 through 55 of the Plan Document. These definitions include the following: Accident [means] an accidental bodily injury that is not related to any illness. * * * Condition [means] any disease, illness, injury, accident, bodily dysfunction, pregnancy, drug addiction, alcoholism or mental or nervous disorder. * * * Covered services and supplies [mean] healthcare services and supplies, including pharmaceuticals and chemical compounds, for which reimbursement is covered under this health insurance plan. The Division of State Group Health Insurance has final authority to determine if a service or supply is covered by the plan. * * * Experimental or investigational services [mean] any evaluation, treatment, therapy or device that meets any one of the following criteria: cannot be lawfully marketed without approval of the US Food and Drug Administration or the Florida Department of Health if approval for marketing has not been given at the time the service is provided to the covered person [hereinafter referred to "Experimental/Investigational Criterion No. 1"]; or is the subject of ongoing Phase I or II clinical investigation, or the experimental or research arm of a Phase III clinical investigation - or is under study to determine the maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition [hereinafter referred to as "Experimental/Investigational Criterion No. 2"]; or is generally regarded by experts as requiring more study to determine maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition [hereinafter referred to as "Experimental/Investigational Criterion No. 3]; or has not been proven safe and effective for treatment of the condition based on the most recently published medical literature of the U.S., Canada or Great Britain using generally accepted scientific, medical or public health methodologies or statistical practices [hereinafter referred to as "Experimental/Investigational Criterion No. 4"]; or is not accepted in consensus by practicing doctors as safe and effective for the condition [hereinafter referred to as "Experimental/Investigational Criterion No. 5"]; or is not regularly used by practicing doctors to treat patients with the same or a similar condition [hereinafter referred to as "Experimental/Investigational Criterion No. 6]. BCBSF and DSGI determine whether a service or supply is experimental or investigational. * * * Illness [means] physical sickness or disease, pregnancy, bodily injury or congenital anomaly. For this plan, illness includes any medically necessary services related to non-emergency surgical procedures performed by a doctor for sterilization. Medically necessary [means] services required to identify or treat the illness, injury, condition, or mental and nervous disorder a doctor has diagnosed or reasonably suspects. The service must be: consistent with the symptoms, diagnosis and treatment of the patient's condition in accordance with standards of good medical practice required for reasons other than the convenience of the patient or the doctor approved by the appropriate medical body or board for the illness or injury in question at the most appropriate level of medical supply, service, or care that can be safely provided. The fact that a service is prescribed by a doctor does not necessarily mean that the service is medically necessary. Medical supplies or equipment [mean] supplies or equipment that are: ordered by a physician of no further use when medical need ends usable only by the particular patient not primarily for the patient's comfort or hygiene not for environmental control not for exercise, and specifically manufactured for medical use. * * * Among the terms not defined in this or any other portion of the Plan Document are "cosmetic," "disease," and "consensus." Petitioner Anna Leigh Miller (Anna) was born two weeks before she was due. Her delivery was normal. Her parents began to notice, immediately following her birth, that her "head tilt[ed]" to the left. Initially, they were not concerned, thinking that this "tilt" was just "temporary." At all times material to the instant case, Anna's primary pediatrician was Ronald Romear, M.D., of Infants and Children, P.A., in West Palm, Florida. When Dr. Romear was unavailable, Anna was seen by other pediatricians in Dr. Romear's practice, including James Beattie, M.D. Anna saw Dr. Romear for her two-week check-up on January 21, 2004. Dr. Romear's physical examination of Anna on this date revealed that her general appearance and head were "normal." In March of 2004, or perhaps somewhat earlier, Anna's parents first noticed that Anna had developed a "flat head." (Anna's "head shape [was] normal at birth.") Anna made a "sick visit" to Infants and Children, P.A., on April 28, 2004, and was seen by Dr. Beattie. She returned, accompanied by her mother, on May 12, 2004, for a "well child visit," and was again seen by Dr. Beattie. During this May 12, 2004, visit, Mrs. Miller shared with Dr. Beattie that, from the time of Anna's birth, Anna was "inclined to do things facing to the left." After examining Anna, Dr. Beattie determined that Anna had torticollis. Torticollis literally means "twisted neck" in Latin. It is a condition characterized by a tightening or foreshortening of the sternocleidomastoid muscle on one side of the neck, resulting in an inability to straighten or turn the head. Anna's torticollis was congenital (that is, present at birth). Dr. Beattie prescribed physical therapy for Anna. Physical therapy is the standard treatment for torticollis. Anna's parents took Anna to the physical therapist twice a week. BCBSF deemed these services to be "covered" under the Plan and authorized payment accordingly. In addition to taking Anna to the physical therapist, Anna's parents, in accordance with instructions they had received, did neck "stretching" exercises with Anna at home five to six times a day. The physical therapist did her "initial evaluation" of Anna on May 20, 2004. During this "initial evaluation," Anna's parents expressed concern about, and the physical therapist observed, "significant flattening of the left posterior aspect of [Anna's] skull resulting in moderated plagiocephalic appearance." The physical therapist told Anna's parents about a cranial orthotic device that was available to treat this "plagiocephalic appearance." Anna's parents knew that this device might not be covered by the Plan. Nonetheless, during a "sick visit" Anna made to Dr. Romear's office on May 26, 2004, Mrs. Miller asked Dr. Romear what his opinion was of the device. Dr. Romear expressed his concurrence with the physical therapist's assessment that Anna was suffering from plagiocephaly, and he referred Anna to Eric Stelnicki, M.D., a craniofacial and pediatric specialist. He also recommended that, before Anna saw Dr. Stelnicki, Anna's parents provide her with repositioning therapy at home. Repositioning therapy involves supervised "tummy time," as well as placement of the child on the side and the use of a strategically placed rolled- up towel or similar item to prevent the child from rolling over on the back and putting pressure on the flattened part of the head. It is the usual first-line treatment for plagiocephaly in those cases where the child is not "able to move readily out of placed positions." Anna's parents followed Dr. Romear's recommendation and attempted repositioning therapy at home. They abandoned their efforts without any success after less than a month because Anna kept moving out of her "placed positions." Instead of seeing Dr. Stelnicki, Anna saw another craniofacial and pediatric specialist in Dr. Stelnicki's practice, Drew Schnitt, M.D. Anna's first visit with Dr. Schnitt was on June 14, 2004. That same day, after the visit, Dr. Schnitt wrote the following letter to Dr. Romear, which accurately related what had occurred during the visit and what Dr. Schnitt had found and recommended: I am seeing Anna in my pediatric cleft and craniofacial office today. She is a 5½ month-old young lady who has been referred to me for an abnormal head shape. She received a full review of systems, history, physical examination, and a set of anthropometric measurements in the office today. Focally, on physical examination, she has a significant amount of left deformational plagiocephaly, with left anterior ear shift, left frontal bossing, fronto-orbital complex shift, and left temporomandibular joint shift. The anterior fontanelle is open. The neck reveals right neck torticollis. The remainder of her physical appearance is within normal limits. Due to the severity of her problem and her age, I am recommending an orthotic cranioplasty device. The preferred device is the DOC band by Cranial Technologies, Inc. I have given them an instruction sheet for range of motion exercises for the neck torticollis and we have demonstrated to them how to do these exercises. I will see them back in one month's time for a re-evaluation. Please do not hesitate to call or contact me with any questions or concerns. Deformational plagiocephaly (which is also known as nonsynostotic positional plagiocephaly) is plagiocephaly (that is, asymmetric or abnormal head shape) caused by external deforming forces. It may be congenital, but, more commonly (as in Anna's case), it occurs postnatally, as a result of, for example, torticollis or forced sleeping position. Deformational plagiocephaly is to be distinguished from another type of skull deformity, craniosynostosis (also referred to as cranial stenostosis), which, unlike deformational plagiocephaly, involves the premature fusion of skull sutures. These sutures need to stay unfused for an infant's head to grow properly and for the infant's brain to expand within the cranial skull. Their fusing prematurely can lead not only to a misshapen skull, but to other problems as well, including vision loss, developmental delay, learning difficulties, increased intracranial pressure and perhaps even herniation of the brain and death. Unlike deformational plagiocephaly, craniosynostosis "typically is a surgical problem, not a problem to try to treat with non-surgical means." Anna was diagnosed as having deformational plagiocephaly, not craniosynostosis. The "DOC band by Cranial Technologies, Inc.," that Dr. Schnitt prescribed for Anna to treat her deformational plagiocephaly4 is a lightweight, custom-fitted skull-molding device consisting of a semi-rigid shell bonded to a foam lining. Worn around the head 23-hours a day, it applies mild dynamic pressure to the prominent areas of the child's skull (while leaving room for growth in the flattened areas) to produce a more symmetrical head shape. Cranial orthotic devices, such as the DOC band, are commonly used to treat children with moderate to severe deformational plagiocephaly for whom repositioning therapy has not worked or for whom repositioning therapy is not a viable option because of their ability "to move readily out of placed positions" or because of the severity of their condition. (These devices are not, however, a treatment for torticollis.) Surgery is performed in "multiple places around the world" to treat deformational plagiocephaly. Cranial orthotic devices, though, are more cost-effective and have fewer complications than surgical intervention. At the time he prescribed the DOC band for Anna, Dr. Schnitt believed that this product was the "best [cranial orthotic device] on the market." Since 1998, the DOC band has been approved by the U.S. Food and Drug Administration (FDA) as safe and effective for the treatment of deformational plagiocephaly. The FDA's approval was announced in the Federal Register, 63 FR 40650-01 (July 30, 1998). The FDA's announcement read, in pertinent part, as follows: ACTION: Final rule. SUMMARY: The Food and Drug Administration (FDA) is classifying the cranial orthosis into class II (special controls). The special controls that will apply to the cranial orthosis are restriction to prescription use, biocompatibility testing, and certain labeling requirements. The agency is taking this action in response to a petition submitted under the Federal, Food, Drug, and Cosmetic Act (the act) as amended by the Medical Device Amendments of 1976, the Safe Medical Devices Act of 1990, and the Food and Drug Administration Modernization Act of 1997. The agency is classifying cranial orthosis into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. EFFECTIVE DATE: August 31, 1998. * * * SUPPLEMENTARY INFORMATION: I. Background In accordance with section 513(f)(1) of the act (21 U.S.C. 360c(f)(1)), devices that were not in commercial distribution before May 28, 1976, the date of enactment of the Medical Device Amendments of 1976 (the amendments), generally referred to as postamendments devices, are classified automatically by statute into class III without any FDA rulemaking process. These devices remain in class III and require premarket approval, unless and until the device is classified or reclassified into class I or II or FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the act, to a predicate device that does not require premarket approval. The agency determines whether new devices are substantially equivalent to previously marketed devices by means of premarket notification procedures in section 510(k) of the act (21 U.S.C. 360(k)) and part 807 of the FDA regulations (21 CFR part 807). -Section 513(f)(2) of the act provides that any person who submits a premarket notification under section 510(k) of the act for a device that has not previously been classified may, within 30 days after receiving an order classifying the device in class III under section 513(f)(1), request FDA to classify the device under the criteria set forth in section 513(a)(1). FDA shall, within 60 days of receiving such a request, classify the device by written order. This classification shall be the initial classification of the device. Within 30 days after the issuance of an order classifying the device, FDA must publish a notice in the Federal Register announcing such classification. -In accordance with section 513(f)(1) of the act, FDA issued an order on March 12, 1998, classifying the Dynamic Orthotic Cranioplasty (DOCTM Band) in class III, because it was not substantially equivalent to a device that was introduced or delivered for introduction into interstate commerce for commercial distribution before May 28, 1976, or a device which was subsequently reclassified into class I or class II. On March 31, 1998, Cranial Technologies, Inc., submitted a petition requesting classification of the DOCTM Band under section 513(f)(2) of the act. The manufacturer recommended that the device be classified into class II. In accordance with 513(f)(2) of the act, FDA reviewed the petition in order to classify the device under the criteria for classification set forth in 513(a)(1) of the act. Devices are to be classified into class II if general controls, by themselves, are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide reasonable assurance of the safety and effectiveness of the device for its intended use. After review of the information submitted in the petition and the medical literature, FDA determined that the DOCTM Band can be classified in class II with the establishment of special controls. FDA believes these special controls will provide reasonable assurance of safety and effectiveness of the device. -The device is assigned the generic name "cranial orthosis," and it is identified as a device intended for use on infants from 3 to 18 months of age with moderate to severe nonsynostotic positional plagiocephaly, including infants with plagiocephalic-, brachycephalic-, and scaphocephalic-shaped heads. The device is intended for medical purposes to apply pressure to prominent regions of an infant's cranium in order to improve cranial symmetry and/or shape. -FDA identified the following risks to health associated with this type of device: (1) Skin irritation, skin breakdown and subsequent infection due to excessive pressure on the skin; (2) head and neck trauma due to alteration of the functional center of mass of the head and the additional weight of the device especially with an infant who is still developing the ability to control his/her head and neck movements; (3) impairment of brain growth and development from mechanical restriction of cranial growth; (4) asphyxiation due to mechanical failure, poor fit, and/or excessive weight that alters the infant's ability to lift the head; (5) eye trauma due to mechanical failure, poor construction and/or inappropriate fit; and (6) contact dermatitis due to the materials used in the construction of the device. -FDA believes that the special controls described below address these risks and provide reasonable assurance of the safety and effectiveness of the device. Therefore, on May 29, 1998, FDA issued an order to the petitioner classifying the cranial orthosis as described previously into class II subject to the special controls described below. Additionally, FDA is codifying the classification of this device by adding new §882.5970. -In addition to the general controls of the act, the cranial orthosis is subject to the following special controls in order to provide reasonable assurance of the safety and effectiveness of the device: (1) The sale, distribution, and use of this device are restricted to prescription use in accordance with 21 CFR 801.109; (2) the labeling of the device must include: (a) Contraindications for the use of the device on infants with synostosis or with hydrocephalus; (b) warnings indicating the need to: (i) Evaluate head circumference measurements and neurological status at intervals appropriate to the infant's age and rate of head growth and to describe steps that should be taken in order to reduce the potential for restriction of cranial growth and possible impairment of brain growth and development and (ii) evaluate the skin at frequent intervals, e.g., every 3 to 4 hours, and to describe steps that should be taken if skin irritation or breakdown occurs; (c) precautions indicating the need to: (i) Additionally treat torticollis, if the positional plagiocephaly is associated with torticollis; (ii) evaluate device fit and to describe the steps that should be taken in order to reduce the potential for restriction of cranial growth, the possible impairment of brain growth and development and skin irritation and/or breakdown; and (iii) evaluate the structural integrity of the device and to describe the steps that should be taken to reduce the potential for the device to slip out of place and cause asphyxiation or trauma to the eyes or skin; (d) adverse events, i.e., skin irritation and breakdown that have occurred with the use of the device; (e) clinician's instructions for casting the infant, for fitting the device, and for care; and (f) parent's instructions for care and use of the device; (3) the materials must be tested for biocompatibility with testing appropriate for long term direct skin contact. * * * V. References -The following references have been placed on display in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. Petition from Cranial Technologies, Inc., dated March 31, 1998. Hellbusch, J. L., L. C. Hellbusch, and R. J. Bruneteau, "Active Counter-Positioning Treatment of Deformational Plagiocephaly," Nebraska Medical Journal, vol. 80, pp. 344 to 349, 1995. Moss, S. D. et. al., "Diagnosis and Management of the Misshapen Head in the Neonate," Pediatric Review, vol. 4, pp. 4 to 8, 1993. -Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 882 is amended as follows: List of Subjects in 21 CFR Part 882 Medical devices. PART 882--NEUROLOGICAL DEVICES * * * 2. Section 882.5970 is added to subpart F to read as follows: §882.5970 Cranial orthosis. -(a) Identification. A cranial orthosis is a device that is intended for medical purposes to apply pressure to prominent regions of an infant's cranium in order to improve cranial symmetry and/or shape in infants from 3 to 18 months of age, with moderate to severe nonsynostotic positional plagiocephaly, including infants with plagiocephalic-, brachycephalic-, and scaphocephalic-shaped heads. -(b) Classification. Class II (special controls) (prescription use in accordance with §801.109 of this chapter, biocompatibility testing, and labeling (contraindications, warnings, precautions, adverse events, instructions for physicians and parents)). Dated: July 21, 1998. A year earlier, in 1997, a "consensus statement" was issued "jointly by several pediatrics organizations (including the Section of Plastic Surgery of the American Academy of Pediatrics and the American Cleft Palate/Craniofacial Society)," in which it was asserted that "deformational plagiocephaly . . . usually responds to conservative measures [such as] the use of skull molding caps." In July of 2003, the American Academy of Pediatrics published a "clinical report" designed to provide "guidance for the clinician in rendering pediatric care" concerning the "[p]revention and [m]anagement of [p]osition [s]kull [d]eformities in [i]nfants."5 The report contained the following observations regarding "skull-molding helmets": Skull-Molding Helmets Several ancient civilization have used head- molding devices in infants to reshape a typically shaped skull into a different but desired skull form. Conversely, skull- molding helmets can be used to correct atypical skull shapes, and similar devices are now proposed for this purpose. However, results from 1 study suggest that repositioning infants may produce improvement in mild to moderate cases similar to that reported with external orthotic devices. Another study has linked the use or helmets with an improvement over that achieved by repositioning alone. The best response for helmets occurs in the age range of 4 to 12 months because of the greater malleability of the young infant skull bone and the normalizing effect of the rapid growth of the brain. There is less modification of the cranial configuration when used after 12 months of age. The use of helmets and other related devices seems to be beneficial primarily when there has been a lack of response to mechanical adjustments and exercises. In most situations, an improvement to repositioning and neck exercise is seen over a 2- to 3- month period if these measures are instituted as soon as the condition is recognized. Because use of skull-molding helmets incurs significant cost, further studies are needed to identify outcomes with and without them. At the end of the report was the following "summary": Summary In most cases, the diagnosis and successful management of deformational plagiocephaly can be assumed by the pediatrician or other primary care clinician. This includes examination for and counseling regarding deformational plagiocephaly in the newborn period and at health supervision visits during infancy, as well as monitoring for improvement or progression. Mechanical methods, if performed early in life, may be effective in preventing further skull deformity and may reverse existing deformity. Referral to a pediatric neurosurgeon with expertise in pediatrics or a craniofacial surgeon should be considered if there is progression or lack of improvement following a trial of mechanical adjustments. BCBSF has a written policy stating that, "[a]s a nonsurgical treatment of plagiocephaly . . . without synostosis, [the DOC band] is considered not medically necessary." This policy statement indicates that it is based on the "lack of [as of February 2004] documented functional impairment" associated with "plagiocephaly . . . without synostosis." The statement, however, does contain an acknowledgement that the "available data [as of February 2004, reveals] that the [DOC band] therapy can indeed reshape the cranium to a more normal contour." Further support for the notion that the DOC band and similar cranial orthotic devices are effective in "reshap[ing] the cranium to a more normal contour" is found in the "most recently published [of the] medical literature" received into evidence at hearing in the instant case: an article entitled, "Management of Deformational Plagiocephaly: Repositioning Versus Orthotic Therapy," authored by John Graham, M.D. and others. This article was published in the February 2005 edition of the Journal of Pediatrics, a "respected [peer-reviewed] journal." Based on their evaluation of the data they examined, the authors of the article concluded that, "[w]hen physical therapy and repositioning fail to treat or prevent plagiocephaly and there is more than 1 cm difference between the two cranial diagonal differences at age 6 months, orthotic therapy is effective in correcting such asymmetry," and they further concluded that "[d]elays in initiating corrective treatment until later infancy may lead to incomplete or ineffective correction even if orthotic therapy is initiated . . ."6 Anna was "cast for the DOC band" at Cranial Technologies, Inc., on June 23, 2004. She returned with her parents to Cranial Technologies, Inc., on July 1, 2003, to try on the DOC band that had been fabricated for her. Only some "trimming adjustments" had to be made. Anna started wearing the band that day. Anna continued wearing the DOC band (23 hours a day) until October 18, 2004. On that date (October 18, 204), the Cranial Technologies, Inc., clinician who had been working with Anna sent Dr. Schnitt a letter advising him that Anna's DOC band treatment had been successfully completed. Anna had obtained a "good result" from the DOC band treatment. Her cranial asymmetry had "markedly improved." Anna's last visit to Dr. Schnitt was on November 29, 2004. That day, after the visit, Dr. Schnitt wrote the following letter to Dr. Romear, which accurately related what had occurred during the visit and what Dr. Schnitt had found and recommended: I am seeing Anna back in my pediatric cleft and craniofacial office today. She is a young lady with left deformational plagiocephaly and right torticollis, who is here again for follow up. She is now 11 months old and was treated in the DOC band cranial molding device for four months and has been out of this since October. She received a full review of systems, history, physical examination, and a set of anthropometric measurements in the office today. Focally on physical examination, she has a mild to moderate amount of residual left deformational plagiocephaly with left anterior ear shift, left frontal bossing, and fronto-orbital complex shift. Her anterior fontanelle remains open. Examination of her neck reveals a minimal amount of residual right neck torticollis. The remainder of the physical examination is within normal limits. I have had a long discussion with mom about the treatment of deformational plagiocephaly. She has made a marked improvement since the beginning of her treatment, and mom is, overall, satisfied, but was asking about going into another helmet to try to improve things further. I have given her this option, but she has decided not to proceed with a second band. I have also advised her of the need to continue with neck range of motion exercises at least until Anna is two years old. Mom would like to continue to follow with me until she is satisfied with the torticollis outcome. I will see her back in two to three months' time. Mom also knows to make an appointment in a more timely manner if she notices any abnormal head growth or regression. Please do not hesitate to call or contact me with any questions or concerns. The Millers were billed $3,000.00 by Cranial Technologies, Inc., for the DOC band and related costs. They filed a claim requesting that the bill be treated as being for services and/or supplies "covered" by the Plan. The request was denied by BCBSF, which issued a Non- Payment Notice. The Millers filed an unsuccessful Level I appeal with BCBSF (as provided for in the Plan Document). They then filed a Level II appeal with Respondent (as provided for in the Plan Document). As noted above, Respondent rejected the Millers' Level II appeal, finding that Anna's DOC band treatment was "cosmetic" and "experimental and investigational" and not "medically necessary," as those terms are used in Plan Document. Thereafter, at the Millers' request, an administrative hearing on their claim was held. The preponderance of the evidence adduced at the administrative hearing establishes that Anna's DOC band treatment was "medically necessary," as that term is defined in the Plan Document, in that the evidence demonstrates the treatment was: "consistent with the symptoms, diagnosis and treatment of [her] condition" (moderate to severe deformational plagiocephaly7 that had not responded to repositioning therapy due, at least in part, to her moving out of her "placed positions"); "in accordance with standards of good medical practice"; "required for reasons other than the convenience of [Anna] or [her] doctor"; "approved by the appropriate medical body or board for the illness or injury in question" in that "pediatrics organizations" have documented their recognition of the beneficial effects devices such as the DOC band have in treating deformational plagiocephaly; and "at the most appropriate level of medical supply, service, or care that [could] be safely provided" in that repositioning therapy had already been attempted without success. The preponderance of the evidence adduced at the administrative hearing fails to establish that Anna's DOC band treatment was " experimental and investigational," as those terms are defined in the Plan Document. Respondent concedes (in its Proposed Recommended Order) the inapplicability of Experimental/Investigational Criterion No. 1 and Experimental/Investigational Criterion No. 2. With respect to the remaining Experimental/Investigational Criteria set forth in Plan Document's definition of "experimental or investigational services": regarding Experimental/Investigational Criterion No. 3, while it has been shown that some "experts" believe more study of DOC band treatment is needed "to determine maximum dosage, toxicity, safety or efficacy," the record evidence is insufficient to demonstrate that DOC band treatment "is generally regarded by experts as requiring [such additional] study"; regarding Experimental/Investigational Criterion No. 4, the record evidence is insufficient to demonstrate that, according to the "most recently published medical literature of the U.S., Canada or Great Britain using generally accepted scientific, medical or public health methodologies or statistical practices," the use of a DOC band to treat a child almost six months of age (Anna's age when she first started wearing the band) with moderate to severe deformational plagiocephaly that has not responded to repositioning therapy is not a "safe and effective . . . treatment of th[is] condition"; regarding Experimental/Investigational Criterion No. 5, while it has been shown that "practicing doctors" do not unanimously accept the DOC band as "safe and effective" for treating deformational plagiocephaly that has not responded to repositioning therapy, the record evidence is insufficient to demonstrate that there is not a consensus or majority8 of "practicing doctors" who are of this opinion9; and regarding Experimental/Investigational Criterion No. 6, the record evidence is insufficient to demonstrate that "practicing doctors" as a group do not "regularly" (meaning typically, but not necessarily in each and every instance, without exception10) use a DOC band or like device to treat deformational plagiocephaly that has not responded to repositioning therapy. The preponderance of the evidence adduced at the administrative hearing establishes that Anna's DOC band treatment was "cosmetic," as that term is used in the Plan Document,11 in that it was prescribed to improve her appearance by ameliorating her deformational plagiocephaly and giving her a more natural-looking, symmetrical head shape, and it had no purpose or effect beyond changing the asymmetrical appearance of her head. The preponderance of the evidence adduced at the administrative hearing fails to establish that this "cosmetic" treatment was the "result of a covered accident." The preponderance of the evidence adduced at the administrative hearing fails to establish that this "cosmetic" treatment was "for correction of a congenital anomaly." While Anna's torticollis was a "congenital anomaly," her deformational plagiocephaly was not, and her DOC band treatment addressed her deformational plagiocephaly, not her torticollis. The preponderance of the evidence adduced at the administrative hearing fails to establish that this "cosmetic" treatment was a "medically necessary procedure to correct an abnormal bodily function." While the treatment was "medically necessary" and undertaken to "correct" an abnormality, the abnormality (the asymmetrical shape of Anna's head) was structural, not functional, in nature. The preponderance of the evidence adduced at the administrative hearing fails to establish that this "cosmetic" treatment was "for reconstruction to an area of the body that has been altered by the treatment of a disease." Inasmuch as Anna's DOC band treatment was "cosmetic" in nature and not within any of the "specific exceptions" noted in the Plan Document, such treatment was excluded from coverage under the Plan.12
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order sustaining the denial of the claim at issue in the instant case. DONE AND ENTERED this 9th day of November, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of November, 2005.
The Issue The issue in this case is whether Respondent properly rejected Petitioner's insurance Policy Form No. SL-94.
Findings Of Fact Petitioner submitted Policy Form No. SL-94 (hereinafter referred to as "the Policy") to Respondent for approval as a stop loss policy pursuant to Section 627.410, Florida Statutes, on or about August 15, 1995. The Policy, standing alone, meets all applicable requirements for approval as a stop loss policy under Section 627.410, Florida Statutes. The Policy obligates Petitioner to pay benefits to an employer, or the trust established by or for the employer, which employer is responsible for the payment of benefits to its employees or their dependents under a self-funded employee welfare benefit plan (hereinafter referred to as "the Plan") qualified under the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Policy purports to provide insurance only to the employer. On its face, the Policy does not assume any of the employer's obligations under the Plan to provide insurance directly to the employer's employees. Under the Policy, Petitioner is obligated to reimburse the employer only after the employer pays a limited amount of benefits under the Plan to any person who is covered under the Plan, i.e. employees or their dependents. The amount of Plan benefits that an employer must pay before Petitioner is obligated to begin reimbursement is determined by specific and aggregate attachment points or deductibles as defined in the Policy's Schedule of Insurance. The specific attachment point is the Plan benefit amount which is wholly retained by the employer for all claims incurred by each covered person during each contract year. The Plan benefit amount does not include deductibles, coinsurance amounts or any other expense or claims which are not reimbursable under the terms of the Plan nor does it include expenses which are reimbursable from any other source. The aggregate attachment point or deductible is the Plan benefit amount which is wholly retained by the employer for all covered persons during a contract year. The Policy's Schedule of Insurance does not specify what the specific and aggregate attachment points will be. However, record evidence indicates that Petitioner intends to market the policy with a specific attachment point as low as $500. Therefore, if the Plan has a deductible of $250 and the Policy has a specific attachment point of $500, the employee would pay the first $250 of eligible expenses, the employer would pay the next $500 of eligible expenses, and Petitioner would reimburse the employer for 100 percent of any excess eligible expenses, for each covered person during a contract year. The Policy's eligible expenses are the covered charges or expenses which are incurred by a covered person while covered under the Plan in the course of treatment for an injury or illness and paid under the Plan subject to the terms, conditions and limitations of the Plan document. In other words, the eligible expenses under the Policy will mirror the eligible expenses of the Plan. Record evidence indicates that Petitioner intends to market the Policy to employers with less than fifty (50) employees. The Policy does not contain provisions related to the following protections: guaranteed availability for any small group employer regardless of whether its employees are sick or have preexisting conditions; guaranteed renewability unless the policyholder fails to pay the premium or commits fraud; limitations on exclusions for pre- existing conditions; portability which allows employees to move from one employer to another regard- less of preexisting conditions; community rated premiums; and, periods of open enrollment. ERISA self-funded benefit plans are not regulated by the state regardless of their terms and conditions. They are not required to include the above referenced protections. If the Plan excludes specific health risks or preexisting conditions such as AIDS, emphysema, heart disease, or cancer, neither the employer nor the Petitioner would be obligated to pay benefits for those risks. Additionally, the Plan is subject to whatever deductible limits the small employer wishes to set. Respondent disapproved the Policy by letter dated August 21, 1995. Respondent correctly rejected the Policy as being inappropriate for the small group health insurance market. The Policy is inappropriate because Petitioner intends to market it to self-insured small group employers with attachment points so low ($500) that it becomes a de facto health insurance policy instead of a stop loss policy. Respondent would not approve a stop loss policy for a small group employer's Plan with specific attachment points at $5,000 or less. Respondent would approve a stop loss policy for a small group employer's Plan with specific attachment points as low as $9,000 or $10,000, regardless of the terms and conditions of that Plan. In that instance, the employer assumes significant risk of loss as a self-funded insurer and the stop loss policy operates to limit that loss. However, an ERISA benefit plan combined with a stop loss policy having specific attachment points as low as $500, such as the one at issue here, substantially limits the self-insured employer's risk of loss to a nominal amount and substitutes Petitioner as a small group health insurer with none of the protections required by Section 627.6699, Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that Respondent enter a Final Order disapproving Petitioner's Policy Form No. SL-94, for use in Florida's small group health insurance market. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of March, 1996. SUZANNE F. HOOD, Hearing Officer Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1996. APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Petitioner's Proposed Findings of Fact Accepted in Findings of Fact 3. Accepted in substance as restated in Findings of Fact 4. Accepted in substance as restated in Findings of Fact 4. Accepted in substance as restated in Findings of Fact 4. Accepted in Findings of Fact 5-7. Accepted as restated in Findings of Fact 4. Not a finding of fact. More like a conclusion of law. Reject the first sentence as contrary to more persuasive evidence. Second sentence accepted as restated in Conclusions of Law 19-21 and 26-27. Rejected. It is a question of fact whether the Policy is a stop loss policy or a health insurance policy regardless of its denomination. Specifically reject Petitioner's finding that the Policy does not violate public policy as expressed in Section 627.6699, Florida Statutes. See Conclusions of Law 24-27. Accepted in Conclusion of Law 23. Accepted in part as restated in Findings of Fact 15-16. See also Conclusions of Law 22, 24-27. Not a finding of fact. More like a conclusion of law and legal argument which is not persuasive as applied to the facts of this case. Not a finding of fact. More like a conclusion of law. Not a finding of fact. More like a conclusion of law. First sentence rejected as contrary to more persuasive evidence. Next five sentences are not findings of fact. Specifically reject any implication that the Policy is a stop loss policy. See Findings of Fact 15-16 and Conclusions of Law 24-27. First two sentences are not findings of fact. Reject any implication that there is no public policy "relating to the issuance of a stop loss policy in the State of Florida to a Florida employer employing 50 or fewer employees." Accept that the state does not regulate employer self-funded medical benefit programs. See Finding of Fact 12. Accept the last sentence as restated in Finding of Fact 15 and Conclusion of Law 24. Rejected. Petitioner's Exhibit 3 shows the legislature was aware that "the bill could increase the likelihood that an employer would choose to self- insure and due to ERISA would be able to avoid state regulation of the insurance product provided to employees." However, the referenced exhibit is rejected as evidence of legislative intent to exclude "related insurance products" from "the statute's regulatory or public policy purview." Rejected for the reasons set forth in the ruling above. Rejected. See Conclusions of Law 24. Substance accepted as restated in Findings of Facts 12 and Conclusions of Law 24. Substance accepted as restated in Findings of Facts 16. First sentence not a finding of fact. Second sentence rejected as contrary to more persuasive evidence; See Findings of Fact 15-16 and Conclusions of Law 24-27. Accept in part as restated in Findings of Fact 15-16 and Conclusions of Law 24-27. A recitation of the testimony is not a finding of fact; substance accepted as restated in Finding of Fact 16. Accept that the state has no specific statutes or rules regulating attachment points in stop loss insurance policies. See Conclusions of Law 19. However, Section 627.6699(2), Florida Statutes, is applicable here because the Policy is a de facto health insurance policy. See Findings of Fact 15-16 and Conclusions of Law 24-27. First sentence rejected as contrary to more persuasive evidence. See Findings of Fact 15-16 and Conclusions of Law 19. First sentence rejected; More like a conclusion of law or legal argument the substance of which is not persuasive. Second sentence irrelevant. Irrelevant. Accepted but subordinate to Findings of Fact 15-16. NAIC's stop loss model act supports the proposition that the Policy is not a stop loss insurance policy but rather a health insurance policy. Accepted in part as restated in Conclusions of Law 19. Accepted but subordinate to Findings of Fact 15-16. Accepted but subordinate to Findings of Fact 15-16. Irrelevant. Rejected as contrary to more persuasive evidence. Respondent's Proposed Findings of Fact Accepted in Findings of Fact 1. Accepted in Findings of Fact 15. Not a finding of fact. Not a finding of fact. More like a conclusion of law. Accepted in Findings of Fact 1. Accepted as restated in Findings of Fact 2. Accepted as restated in Findings of Fact 11, 15-16. Accepted as restated in Findings of Fact 10, 15-16, and Conclusions of Law 22, 24-27. Accepted as restated in Findings of Fact 4. Accepted as restated in Findings of Fact 4-8 and 10. Accepted in Findings of Fact 10 and Conclusions of Law 22. Accept that the Policy provides for a specific attachment point of not less than $500; See Findings of Fact 8, 15 and 16. There is no evidence that the Policy's specific attachment point can be no more than $1,000. Accepted as restated in Findings of Fact 5-8. Accepted as restated in Findings of Fact 8. Accepted as restated in Conclusions of Law 22. Accepted as restated in Findings of Fact 9, 11-13 and Conclusions of Law 22, 24-27. Accepted as restated in Findings of Fact 9-13. Accepted as restated in Findings of Fact 11. Accepted in part in Findings of Fact 14. Reject that Petitioner could totally avoid the coverage responsibilities otherwise imposed by Section 627.6699, Florida Statutes, merely by setting the Policy's attachment points at the same level as the deductible in the Plan. If the Plan's deductible was $500 and the Policy's specific attachment point was $500, the employee would pay the first $500 of expenses, the employer would be responsible for the next $500 of expenses, and Petitioner would reimburse the employer for 100 percent of any excess eligible expenses for that employee during the contract year. However, Petitioner can totally avoid paying for state mandated protections because the Policy will mirror any prohibited exclusions or provisions in the Plan. Substance accepted in part; See Findings of Fact 15-16. There is no evidence that the Policy's specific attachment point can be as high as $2,000. Accepted as restated in Findings of Fact 16; See Conclusions of Law 24-27. COPIES FURNISHED: Michael H. Davidson, Esquire Department of Insurance Division of Legal Services 200 E. Gaines Street Tallahassee, Florida 32399-0333 Frank J. Santry, Esquire Granger, Santry, et al. Post Office Box 14129 Tallahassee, Florida 32308 Bill Nelson, State Treasurer Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Esquire Department of Insurance and Treasurer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: The Department is the state agency responsible for the licensure and discipline of persons holding or those eligible to hold various insurance licenses. At all times material to this case, Respondent was licensed and eligible for licensure in this state as a health insurance agent. For all policies described below, Respondent was eligible to receive a sales commission and a bonus package which provided Respondent incentive to complete sales of insurance policies. At all times material to this case, Respondent acted as a sales agent for the following insurance companies: Diversified Health Services, National States Insurance Company, Penn Treaty, and Transport Life. Respondent sold health insurance policies, Medicare supplements, home nursing-care policies, nursing home policies, and booster plans to supplement additional coverage under Part B of Medicare. On or about April 20, 1988, Respondent went to the home of Martha and Sam Klingensmith in Port St. Lucie, Florida. Respondent's visit was in response to an information lead card that Mrs. Klingensmith had mailed to an insurance company. Mr. Klingensmith had had surgery in January, 1988, on a malignant brain tumor. Mrs. Klingensmith was anxious for her husband to receive the best care possible and hoped to obtain insurance benefits to help with the costs associated with that care. Mrs. Klingensmith told Respondent about her husband, who was too sick to be interviewed by Respondent (he was bedridden in another room). At that time Mrs. Klingensmith advised Respondent that she and her husband had Medicare supplement policies through a group policy from AARP. Respondent did not review that policy. On or about April 20, 1988, Respondent completed insurance applications for Mr. and Mrs. Klingensmith for nursing home insurance policies. The application form provided, in part, the following questions: Is the insurance being applied for intended to replace any accident or sickness insurance, health service or health maintenance contract? * * * Complete the following for each person named above who now has insurance in force or pending: * * * Does any person above have or ever had any of the following: (Underline condition) A. Tumor, cancer, malignancy or growth of any kind? * * * g. Disease of the rectum or intestine, stomach, kidney, prostate, urinary bladder, liver, gall bladder? * * * 7.a. Has any person named above consulted or been treated by any physician or practitioner in the last five years? b. Has any person named above been confined in a hospital in the last five years? * * * 9.a. List conditions for which medication has been taken or doctor consulted within the past six months: * * * 10. If any part of questions 6 or 7 was answered YES give details--otherwise--answer question by stating "NONE" On the application form for Mr. Klingensmith, Respondent wrote the following responses: as to question 4, "No" was entered; as to question 5, "NONE" was entered; as to 6.a. "Yes" was checked; as to questions 7a. and 7b., "Yes" was checked; as to question 9, only medications not conditions were listed; and under question 10, the remaining effects were indicated as "Good Health." The answers given by Respondent to questions 5, 9, and 10 were incorrect and contrary to the information Mrs. Klingensmith had given Respondent. Mrs. Klingensmith signed the application for her husband. On Mrs. Klingensmith's application form completed by Respondent on April 20, 1988, the answer to question 5 was incorrect and contrary to the information Mrs. Klingensmith had given Respondent. On or about May 17, 1988, Respondent returned to the Klingensmith home and completed an application for Mr. Klingensmith for an extended care insurance policy. The application for that policy was identical to the one described above. Respondent completed the form and gave the same responses that are indicated above. Respondent knew that Mr. Klingensmith had the National States policy from April, 1988, and he failed to include that information on the application. Further, since Mr. Klingensmith remained bedridden, the response of "good health" to question 10 continued to be false and contrary to the information supplied by Mrs. Klingensmith. On August 17, 1988, Respondent went to the Klingensmith home and completed two applications for Mr. 5 Klingensmith: one for a Medicare supplement insurance policy and one for a hospital confinement indemnity insurance policy; both to be issued by National States. On September 14, 1988, Respondent went to the Klingensmith home and completed an application for Mr. Klingensmith to receive a medical/surgical insurance policy from National States. That application did not disclose any of the prior policies sold by Respondent, was again signed by Mrs. Klingensmith (her husband continued to be gravely ill), and falsely stated that Mr. Klingensmith was in good health. At all times material to the sales of the five policies described above for Mr. Klingensmith, Respondent knew or should have known that Mr. Klingensmith was terminally ill. Respondent either did not report the information given by Mrs. Klingensmith or chose not to inquire further based upon the answers she gave him. Mr. Klingensmith died, at home, in October, 1988. In connection with the Klingensmith policies Respondent was required to complete a certification form pursuant to Rule 4-46.004, Florida Administrative Code. That form is to be signed by the insurance applicant. Without Mrs. Klingensmith's prior consent or knowledge, Respondent executed certification forms on behalf of the Klingensmiths. In August, 1988, Mrs. Klingensmith asked Respondent to examine a cancer insurance policy issued by Bankers Fidelity Life Insurance Company covering the Klingensmiths. Respondent failed to disclose that policy on the applications completed in August and September, 1988. Further, Respondent failed to accurately disclose the benefits of that policy to Mrs. Klingensmith. The cancer policy would provide additional benefits which the Respondent should have known could be helpful since Mr. Klingensmith had been diagnosed with a malignant tumor. In September, 1988, Respondent sold a medical/surgical policy to Charles Areni. Subsequently, in April, 1989, Mr. Areni asked Respondent to assist him in the completion of claims forms. Respondent went to Mr. Areni's home, helped him complete the claims forms, and sold him a National States Medicare supplement insurance policy. At that time, Respondent knew Mr. Areni had been hospitalized since a cancerous prostate problem had reoccurred, and that Mr. Areni was taking medication for pain associated with his most recent surgery. The application completed by Respondent for Mr. Areni was the same form described in paragraph 6 above. Respondent submitted the following false responses to the questions posed by that questionnaire: in response to question 5, "None" was entered; to question 6a. Respondent checked "No" when he knew or should have known (based upon Mr. Areni's answers) that the prostate condition was cancerous; and "None" to question 9. Further, Respondent provided that Mr. Areni was in good health in response to question 10. At that time Mr. Areni was not in good health, and, while his prognosis was uncertain, it was apparent that he was in poor health. On or about January 19, 1989, Respondent went to the home of Ruth Stone in Fort Pierce, Florida. That visit was 7 in response to Mrs. Stone's mailed in lead card. At that time, Mrs. Stone was insured by American Life Assurance Corporation with whom she had a Medicare supplement policy. Mrs. Stone told Respondent about her policy but did not show it to him. Without reviewing the existing policy, Respondent advised Mrs. Stone that a policy he could offer her through National States would be a better buy. Based upon Respondent's representations, Mrs. Stone elected to apply for a policy through Respondent. To that end, Respondent completed the application described in paragraph 6 for Mrs. Stone. Respondent answered question 5 incorrectly since he knew that Mrs. Stone had a current policy. Later, after speaking with her other agent, Mrs. Stone cancelled the National States policy by stopping payment on her check. She later gave a sworn statement to the Department. After Respondent found out about Mrs. Stone's complaint to the Department, he asked her to change her statement since he might lose his job. On or about February 17, 1988, Respondent went to the home of Edward and Julia Whitham in Fort Pierce, Florida. Respondent sold the Whithams Medicare supplement policies to be issued by National States. The policies sold to the Whithams did not cover dental or optical services. At the time they purchased the policies, the Whithams were under the impression that optical and dental services were covered. Respondent signed the certifications required by Rule 4-46.004, Florida Administrative Code, for the Whithams without their prior consent or approval.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Insurance, Office of the Treasurer enter a final order revoking the Respondent's health care insurance license. DONE and ENTERED this 7th day of August, 1990, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1990. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Nancy S. Isenberg and Dennis Silverman Department of Insurance Division of Legal Services Room 412, Larson Building Tallahassee, Florida 32399-0300 Kelli Hanley Crabb Battaglia, Ross, Hastings & Dicus, P.A. 980 Tyrone Boulevard St. Petersburg, Florida 3371014 APPENDIX TO CASE NO. 89-4986 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 35 are accepted. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as contrary to the weight of the evidence. Paragraph 38 is accepted. Paragraphs 39 through 48 are accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: Paragraph 1 is accepted. Paragraph 2 is accepted. Paragraph 3 is accepted. Paragraph 4 is rejected as contrary to the weight of credible evidence. Paragraph 5 is rejected as contrary to the weight of the evidence. Paragraph 6 is accepted as to the fact that the Whithams purchased policies from Respondent; otherwise, rejected as irrelevant. Paragraph 7 is rejected as unsupported by the record. Paragraph 8 is accepted. With regard to paragraph 9, it is accepted that the Whithams asked that their policies be reinstated; otherwise rejected as unsupported by the record or irrelevant. Paragraph 10 is rejected as unsupported by the record. The first sentence of paragraph 11 is accepted. The remainder of the paragraph is rejected as contrary to the weight of the evidence. Paragraph 12 is accepted but is irrelevant. Paragraph 13 is accepted but is irrelevant. Paragraph 14 is accepted as to their complaint against the company but is irrelevant. The first sentence of paragraph 15 is accepted. The remainder of the paragraph is accepted with the notation that Mrs. Stone did advise Respondent that she had a policy in effect. She was shopping for a cheaper policy that offered as good or better benefits. Respondent made no effort to review Mrs. Stone's policy. Paragraph 16 is rejected as irrelevant. With regard to paragraph 17, it is accepted that based upon Respondent's representations, Mrs. Stone purchased a national States policy; otherwise rejected as irrelevant. Paragraph 18 is rejected as contrary to the weight of the evidence. With regard to paragraph 19, it is accepted that Mrs. Stone spoke with her agent and decided to stop payment on the check to National States; otherwise rejected as irrelevant. Paragraph 20 is not supported by the record and is, therefore, rejected. Paragraph 21 is rejected as-irrelevant. Paragraph 22 is accepted. With regard to paragraph 23, it is accepted that the application disclosed a prostate condition; otherwise rejected as not supported by the record. Paragraph 24 is accepted. Paragraph 25 is accepted. Paragraph 26 is accepted with the notation that Respondent did not complete the application with all of the pertinent information that Mr. Areni gave him; consequently, Respondent was attempting to have the policy issued when he knew or should have known that Mr. Areni's cancer would preclude him from being eligible. Paragraph 27 is rejected as contrary to the weight of the evidence; see the notation to paragraph 26 above. Paragraph 28 is rejected as irrelevant. Paragraphs 29 through 31 are accepted. The first sentence of paragraph 32 is accepted. With regard to the second sentence, it is accepted that Respondent was not supposed to write insurance for cancer patients, however, the overwhelming evidence in this case established that Respondent did just that. The first sentence of paragraph 33 is accepted. It is further accepted that Mrs. Klingensmith executed the applications on behalf of herself and her husband; otherwise the paragraph is rejected as either unsupported by the record or contrary to the weight of the evidence. The first sentence of paragraph 34 is accepted. The remainder is rejected as contrary to the weight of the evidence since the comment was only made in relation to Mr. Klingensmith's day-to-day behavior. He undoubtedly had some good days relative to his more severe days. It is further concluded that Mr. Klingensmith was never seen by any visiting insurance person other than as a bedridden person. Mr. Bessimer's comment that Mr. Klingensmith could have been napping was not credible in light of the total circumstances known to Respondent. Paragraph 35 is accepted but is irrelevant. The second sentence of paragraph 36 is accepted. With regard to the first sentence of that paragraph, it is rejected as contrary to the weight of the evidence. Mrs. Klingensmith's account of the conversation has been deemed more credible than the Respondent's. Paragraphs 37, 38, and the first sentence of paragraph 39 are accepted. With regard to the remainder of paragraph 39, it is rejected as contrary to the weight of the credible evidence. Paragraph 40 is accepted but is irrelevant.
Findings Of Fact At all times material hereto, Respondent has been licensed, and eligible for licensure, in the State of Florida as a health insurance agent. On or about August 16, 1988, Respondent contacted Frank and Theresa Masin of Englewood, Florida, as a result of a "lead card" that they had sent to Respondent's company requesting information on health insurance. Respondent left an outline of coverage that would be provided under nursing home policies the Masins were interested in purchasing, and eventually took an application for a nursing home policy providing $80 a day nursing home benefits, and $40 a day for home care benefits. It was not established at hearing that Respondent made any statement or representation to Mr. or Mrs. Masin to the effect that he would obtain, for each of them, nursing home insurance from National States Insurance Company (hereinafter "National States") that provided, among other benefits, custodial care benefits. In fact, Mr. Masin denied at hearing that Respondent had ever mentioned anything about custodial care benefits, but instead, he testified that Respondent expressly told him that the policies did not provide custodial care benefits. Respondent even highlighted a portion of their policies that stated custodial care was not covered. On or about November 29, 1988, Respondent contacted Robert McClintick of Nokomis, Florida, since McClintick's insurance policy with National States had lapsed. At the time of this visit, Mr. McClintick had no nursing home coverage, and so they discussed the National States Medicare Supplement that could be purchased with a nursing home rider providing intermediate care benefits. The nursing home rider that was available through National States was very important to Mr. McClintick, and was a major factor in his decision to cancel his coverage with Pioneer Life Insurance Company and replace it with the National States policy. Respondent fully explained to Mr. McClintick that the basic Medicare Supplement policy which he had with Pioneer offered slightly higher benefits, but that the additional nursing home rider available through National States would give him greater protection overall. Mr. McClintick made a reasoned choice, after a full explanation of the benefits and coverages, to replace his Pioneer policy with the National States policy and rider. The evidence is conflicting as to whether Respondent made a statement or representation to Mr. McClintick to the effect that he would stop payment of Mr. McClintick's bank draft to Pioneer on his Pioneer Medicare Supplement policy, and obtain a refund for him. In fact, Mr. McClintick's testimony on this point is contradictory. Therefore, it cannot be found that Respondent made any such representation or statement. Respondent did not stop payment of Mr. McClintick's bank draft to Pioneer. On or about June 30, 1988, Respondent contacted Alma H. LaForce of Venice, Florida, for the purpose of selling or discussing insurance. Pursuant to said contact, Alma H. LaForce purchased insurance from National States through Respondent. At no time did Respondent represent that said insurance was Medicare Supplement insurance because it was not, in fact, Medicare Supplement insurance. Rather, the coverage which the Respondent provide was a medical- surgical supplement to LaForce's two AARP policies. He left an outline of coverage with her which correctly described and set forth the coverage which she had purchased. When informed by LaForce's daughter that she was not satisfied with the coverage that he had provided to her mother, Respondent explained the procedure that should be followed for the insured to cancel this coverage. In June, 1988, Respondent contacted Florence B. Strom of Venice, Florida, in response to a lead card she had completed requesting insurance information. Respondent enrolled Ms. Strom in two policies, an NH-1 nursing home policy and an MBS medical-surgical policy from National States, and noted on the applications for both policies that she had an existing AARP policy. In November, 1988, Ms. Strom informed Respondent that she was dissatisfied with her AARP coverage, and he enrolled her in a National States Medicare Supplement policy to replace her AARP coverage. After receiving the National States policy, she changed her mind and returned the policy to National States for a full refund. Respondent made no representation to Florence B. Strom that said insurance was additional nursing home insurance because, in fact, it was a medicare supplement policy. On or about August 10, 1988, Respondent contacted Melvin and Mabel Pierce of Venice, Florida, in response to a notice that their National States policies had lapsed. Mr. and Mrs. Pierce purchased Medicare Supplement insurance from National States through Respondent. At the time of Respondent's visit, the Pierces had just purchased Medicare Supplement insurance from Old Southern Life Insurance Company (hereinafter "Old Southern"), but their policies had not yet been issued or delivered. Therefore, they still had thirty days to cancel their Old Southern policies and obtain a full refund. Respondent assisted them in writing to Old Southern canceling their policies and requesting a full refund. At no time did Respondent tell the Pierces that he would personally get them their money back from Old Southern. In completing the National States application which is in evidence, Respondent fully disclosed and accurately reflected the medical condition and medical history of the Pierces, and specifically disclosed the fact that Mrs. Pierce had a mastectomy in 1980. It was established that the Pierces have submitted claims to, and received benefits from, National States under these policies which Respondent sold to them. On or about August 18, 1988, Respondent contacted Ralph and Beatrice MacGowan of Englewood, Florida, in response to a lead card they had submitted. At that time, Mr. and Mrs. MacGowan had in force Medicare Supplement insurance with Old Southern, and they purchased one Medicare Supplement policy each from National States through Respondent. Respondent advised them to keep their Old Southern policies in force on a monthly basis until after the National States policies were issued because of the preexisting clauses in the National States policies. The MacGowans signed replacement forms indicating they knew they were replacing their Old Southern policies with the ones from National States, and they also signed certification forms indicating they had received outlines of coverage under the National States policies from the Respondent. It was established that Respondent fully explained the differences between the Old Southern and National States policies, and gave the MacGowans a reasonable time to read the replacement forms. He enrolled them in a bank plan to deduct premiums from their checking account, and Mr. MacGowan signed the bank plan authorization form. Mr. MacGowan admitted that the signature on the authorization form was his. Respondent visited Kenneth Kutter of Lakeland, Florida, a total of three times in early 1988 for the purpose of selling or discussing insurance. At that time, Kenneth Kutter had Medicare Supplement insurance in force with Old Southern. During his first visit, Respondent left Mr. Kutter an outline of coverage, and went over that outline with him, checking off the various benefits provided under the National States policy. During his second visit, Respondent answered questions that Mr. Kutter had about the outline of coverage. On his third visit, Respondent sold Mr. Kutter a National States Medicare Supplement policy to replace his Old Southern policy, and filled out the application to reflect that it would be replacing the Old Southern coverage. Mr. Kutter admitted at hearing that he understood the coverages that Respondent had explained to him, and that he had received the outline of coverage. While he did purchase additional Medicare Supplement benefits, Mr. Kutter specifically rejected nursing home, dental, vision and hearing riders which were available for this policy. After receiving his policy, Mr. Kutter changed his mind and decided he did want the nursing home rider. However, he was informed by National States that he would have to wait until his renewal date to add the nursing home rider, and he thereupon returned his National States policy for a full refund. On or about March 2, 1988, Respondent contacted Rachael Peterson of Lakeland, Florida, for the purpose of selling or discussing insurance. Pursuant to said contact, Rachael Peterson purchased two policies of insurance from National States through Respondent. One policy was a Medicare Supplement policy with a rider providing dental, vision and hearing coverage. Thereafter, Mrs. Peterson purchased eyeglasses, but she never filed a claim under her National States policy because a sales clerk told her that it would not be covered. She never attempted to find out from National States if such a claim would be paid. She also incurred a $1000 hospital bill, but did not file a claim with National States because she did not think it would be paid. Mrs. Peterson admitted she does not really know what her policies will pay because she has never bothered to file a claim. She also acknowledged that Respondent had sold her exactly what she wanted, a Medicare Supplement policy. On or about January 31, 1989, Respondent contacted Arthur and Esther Braun of North Port, Florida, who each purchased two policies of insurance through Respondent from National States. It was established that Respondent explained to them that the policies would provide $40 per day for home care coverage, and Mr. Braun admitted that Respondent never told him the policy would pay in excess of $40 per day. They discussed the fact that home care coverage could be used as an alternative to custodial care benefits because it was less expensive than custodial care coverage. He did not represent that this was long-term custodial care coverage. Respondent also did not represent to the Brauns that they would receive benefits under their National States policies regardless of payments made by Medicare because these policies have nothing to do with Medicare or Medicare Supplement coverage. On or about November 30, 1988, Respondent had contact with Mary Johnson and Harry Sawyer of Venice, Florida. Pursuant to said contact, Mary Johnson and Harry Sawyer purchased one policy of insurance each through Respondent from National States. These policies do not provide long-term custodial care benefits. In conjunction with the sale of these policies, Respondent did not state or represent to Mary Johnson or Harry Sawyer that the insurance they were purchasing provided long-term custodial care benefits. Mary Johnson admitted at hearing that Respondent explained the benefits she was purchasing, and that they did not discuss custodial care coverage. Harry Sawyer also admitted that Respondent fully explained the coverage he was purchasing. They were both enrolled by Respondent in a bank plan providing automatic withdrawal from their checking accounts of premiums for the National States policies. They provided Respondent with blank deposit slips for the purpose of enrolling them in the bank plan. It was established that Respondent fully explained the coverage they were purchasing, and also the bank plan in which they were enrolled. The evidence does not establish that Respondent falsely or inaccurately compared policies he was selling with policies that the complaining witnesses called on behalf of the Petitioner may have already had. Petitioner's own expert witness, Rosa Mae Ferrell, admitted that she could not express any opinion as to whether one policy is "better" than another policy, since the selection of a particular policy is a personal choice based upon whether an insured prefers one policy over another.
Recommendation Based upon the foregoing, it is recommended that Petitioner enter a Final Order dismissing all charges against Respondent contained in the Administrative Complaint filed in this matter. DONE AND ENTERED this day of August, 1990 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 28th day of August, 1990. APPENDIX Rulings on the Petitioner's Proposed Findings of Fact: 1-5. Adopted and Rejected in part in Finding 3. 6-9. Adopted and Rejected in part in Finding 4. 10-13. Adopted and Rejected in part in Finding 5. 14-19. Adopted and Rejected in part in Finding 6. 20-26. Adopted and Rejected in part in Finding 7. 27-34. Adopted and Rejected in part in Finding 8. 35-39. Adopted and rejected in part in Finding 9. 40-48. Adopted and Rejected in part in Finding 10. 49-55. Adopted and Rejected in part in Finding 11. Rulings on the Respondent's Proposed Findings of Fact: 1. Adopted in Finding 1. 2. 3-5. 6-12. Rejected as unnecessary and irrelevant. Adopted and Rejected in part in Finding Adopted and Rejected in part in Finding 2. 3. 13. Rejected as unnecessary. 14-17. Adopted and Rejected in part in Finding 4. 18-20. Adopted and Rejected in part in Finding 5. 21-24. Adopted and Rejected in part in Finding 6. 25-28. Adopted and Rejected in part in Finding 7. 29-33. Adopted and Rejected in part in Finding 8. 34-37. Adopted and Rejected in part in Finding 9. 38-41. Adopted and Rejected in part in Finding 10. 42-46. Adopted and Rejected in part in Finding 11. 47. Rejected as unnecessary. Copies furnished: C. Christopher Anderson, Esquire 412 Larson Building Tallahassee, FL 32399-0300 Thomas W. Stahl, Esquire 817 North Gadsden Street Tallahassee, FL 32303-6313 Wayne O. Smith, Esquire 5420 Central Avenue St. Petersburg, FL 33707 Don Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue Whether Respondent committed the offenses set forth in the Administrative Complaint and, if so, the penalty that should be imposed.
Findings Of Fact At all times material hereto, Respondent was licensed by Petitioner as an insurance agent in the State of Florida licensed to sell health insurance. At all times material hereto, Respondent was not formally affiliated with Cleveland Insurance Agency. However, Cleveland Insurance Agency often referred clients to Respondent for health and Medicare supplement policies because Cleveland Insurance Agency did not handle those type policies. Prior to November 1987, Respondent, working in conjunction with Cleveland Insurance Company, sold to Irene Goldberg a health insurance policy issued through Provider's Fidelity Insurance Company (Provider's Fidelity). On November 29, 1987, Ms. Goldberg paid $1,504.56 as the annual renewal premium for this health insurance policy which extended her coverage through December 4, 1988. In March of 1988, Ms. Goldberg contacted Cleveland Insurance Agency and requested that someone review her health insurance coverage. Cleveland Insurance Agency referred Ms. Goldberg's request to Respondent. Respondent was familiar with the terms and conditions of the health insurance coverage Ms. Goldberg had in place and he knew that she had paid the premium for this policy through December 1988. Upon visiting with Irene Goldberg on or about March 10, 1988, Respondent presented Ms. Goldberg with a business card that intentionally misrepresented his status with Cleveland Insurance Company. Because Ms. Goldberg had placed most of her insurance needs through Cleveland Insurance Agency during the past few years, Respondent intentionally misled Ms. Goldberg into thinking that he was formally affiliated with Cleveland Insurance Agency. During that visit, Respondent recommended to Ms. Goldberg that she purchase a policy of insurance issued by First National Life Insurance Company (First National) to replace her Provider's Fidelity policy. Ms. Goldberg specifically discussed with Respondent a preexisting medical condition which required periodic medical treatment and the need for the treatment required by this condition to be covered by the new policy. Respondent assured Ms. Goldberg that the preexisting condition would be covered by the new policy. Respondent also told Ms. Goldberg that he would cancel the Provider's Fidelity policy and that he would secure on her behalf a pro rated refund of the premium she had paid to Provider's Fidelity. Based on Respondent's representations, Ms. Goldberg agreed to purchase the First National policy. On March 30, 1988, Ms. Goldberg gave to Respondent a check made payable to First National Life Insurance Company in the amount of $1,892.00, the amount Respondent had quoted as the full annual premium. A few days later, Respondent contacted Ms. Goldberg and advised her that there would be an additional premium in the amount of $1,360.00, which Ms. Goldberg paid on April 4, 1988. This additional premium was, according to Respondent, for skilled nursing care coverage which First National had added as a mandatory feature of the policy Ms. Goldberg had purchased. The skilled nursing care coverage was, in fact, a separate policy which was not a mandatory feature of the policy Ms. Goldberg thought she was purchasing from First National. Respondent misled Ms. Goldberg as to the terms of the policies he had sold her and as to the number of policies he had sold her. Respondent represented that the premiums he had collected on behalf of First National were in payment of a single health insurance policy. Respondent had sold Ms. Goldberg four separate policies, and he collected a commission for each of the policies. When Ms. Goldberg received her insurance documents from First National, she learned for the first time that Respondent had sold her four separate policies of insurance, including a cancer policy that she and Respondent had never discussed. In addition to the health and cancer policies, Respondent sold Ms. Goldberg a home convalescent care policy and a separate skilled nursing care policy. Respondent had sold Ms. Goldberg policies of insurance that Ms. Goldberg had not requested and that she did not know she was buying. Upon reading the health policy, Ms. Goldberg discovered that her new First National Life policy excluded her preexisting condition. Ms. Goldberg contacted Respondent who told her that he had not cancelled the Provider's Fidelity policy as he had agreed to do and that he had not tried to get the pro rated refund of the Provider's Fidelity premium. Respondent told her that any claim she might have for the preexisting condition should be filed under the Provider's Fidelity policy. Ms. Goldberg then complained to First National which, after an investigation, refunded to Ms. Goldberg the premiums she had paid for the three policies. Respondent had received a commission on the policies of insurance he had sold to Ms. Goldberg. As of the time of the hearing, Respondent had not reimbursed First National for the commission he had received based on the premiums that were subsequently refunded to Ms. Goldberg. In February 1988, Respondent met with Helen Krafft to discuss her health insurance needs. During the course of the meeting, Respondent presented to Ms. Krafft a business card which intentionally misrepresented his affiliation with Cleveland Insurance Agency. This business card misled Ms. Krafft into believing that Respondent was formally affiliated with Cleveland Insurance Agency. On February 18, 1988, Respondent sold to Ms. Krafft a health insurance policy through First National and a health insurance policy issued through American Sun Life, at which time he collected a premiums in the total amount of $519.80 for six months of coverage from each of the two policies. In July 1988, Respondent visited with Ms. Krafft at her place of work and told her that she should pay her renewal premiums for the health insurance policies on or before August 1, 1988, to avoid a premium increases. Respondent knew, or should have known, that there were no premium increases scheduled for those policies and that there were no discounts for early payment of the premiums The renewal premiums Respondent quoted Ms. Krafft for the two policies totaled $485.40. At Respondent's instructions Ms. Krafft delivered to Respondent her signed check dated July 18, 1988, in the amount of $485.40 with the payee's name left blank. Respondent accepted these trust funds from Ms. Krafft in a fiduciary capacity. Instead of using these funds to pay the premiums as he had agreed to do, Respondent filled his name in on Ms. Krafft's check and cashed it. Ms. Krafft learned that Respondent had not used the funds she had given him to renew her two policies when she started getting late payment notices from the two insurance companies with accompanying threats of cancellation if the premiums were not paid. In late September 1988, Respondent paid to Ms. Krafft the sum of $485.40 in cash. In June of 1988, Steven R. and Marilyn Hill applied, through Respondent, for a health policy with First National. The Hills paid the initial premium of $304.37 by check made payable to First National on June 26, 1988. Because of underwriting considerations, First National informed Respondent that the Hills would have to pay a higher premium to obtain the insurance they wanted. The Hills were not willing to pay the higher premium and requested a refund of the amount they had paid. First National made the refund check payable to Steven Hill and mailed the check to Respondent. There was no competent, substantial evidence as to what happened to the check other than First National Life stopped payment on the check and it never cleared banking channels. A second refund check was later delivered to Steven Hill. First National contended at the hearing that Respondent had accrued a debit balance in the amount of $2,692.45 as a result of his dealings as an agent of the company. Respondent contended that he is entitled to certain offsets against the amount First National claims it is owed based on commissions he contends that he had earned but had not been paid. First National had not, prior to the hearing, submitted to Respondent any type of accounting of sums due, nor had it explicitly demanded any specific sum from Respondent. Instead, First National had made a blanket demand that Respondent return all materials belonging to First National and advised that future commission checks would be held in escrow. From the evidence presented it could not be determined that Respondent was indebted to First National.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order which finds that Respondent committed the multiple violations of the Florida Insurance Code as set forth in the Conclusions of Law portion of this Recommended Order and which further revokes all licenses issued by the Department of Insurance and Treasurer to Respondent, John Richard Klee. DONE AND ENTERED this 30th day of November, 1989, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division Of Administrative Hearings this 30th day of November, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-3269 The following rulings are made on the proposed findings of fact submitted by Petitioner: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph 3 are rejected in part as being a conclusion of law. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 5 are adopted in material part by paragraph 3 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 4 of the Recommended Order. The proposed findings of fact in paragraph 7 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 8 are adopted in material part by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 9 are adopted in material part by paragraphs 5 and 6 of the Recommended Order. 10 are adopted in material part 11 are adopted in material part 12 are adopted in material part 13 are adopted in material part 14 are adopted in material part 15 are adopted in material part 16 are adopted in material part 17 are adopted in material part 18 are adopted in material part 19 are adopted in material part 20 are adopted in material part 21 are adopted in material part 22 are adopted in material part 23 are adopted in material part 24 are adopted in material part 25 are rejected as being The proposed findings of fact in paragraph by paragraphs 5 and 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraphs 5 and 7 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 10 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 2 and 10 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph unsubstantiated by the evidence. The proposed findings of fact in paragraph 26 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 27 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 28 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 29 are adopted in material part by paragraph 14 of the Recommended Order. The proposed findings of fact in paragraph 30 are adopted in material part by paragraph 14 of the Recommended Order. COPIES FURNISHED: Roy H. Schmidt, Esquire Office of the Treasurer Department of Insurance 412 Larson Building Tallahassee Florida 32399-0300 Greg Ross, Esquire 400 Southeast Eighth Street Fort Lauderdale, Florida 33316 Don Dowdell General Counsel The Capitol Plaza Level Tallahassee, Florida 32399-0300 Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact Petitioner is an employee of the State of Florida, and was at all times pertinent, a member of the State Group Health Insurance Program administered by Blue Cross and Blue Shield of Florida, Inc. In March of 1984, Petitioner was hospitalized due to severe indigestion and abdominal pain. Petitioner was discharged from the hospital and informed by his physician that if his condition worsened, surgery would be necessary. Petitioner's condition worsened and on May 28, 1984, his physician, R. Klein Bowen, M.D., admitted him to the hospital with a pre-operative diagnosis of chronic acalculus cholecystitis which is chronic inflammation of the gallbladder. On May 29, 1984, said physician operated upon petitioner and his operative report listed the following under the title "Operation": Cholescystectomy. Attempted operative cholangiogram. Incidental appendectomy. The description of the operative procedure stated in the operative report (Respondent's Exhibit 1) establishes that the appendectomy which was performed was accomplished through the same incision which was made for performing the cholescystectomy (gallbladder removal). The operative report stated that the appendix was not acutely inflamed. Subsequent to the operative procedures the Petitioner filed a claim with the State Group Health Insurance Plan administrator, seeking payment for the following charges: May 28, 1984, $90.00 for consultation and case history preparation prior to surgery; May 29, 1984, $1,350.00 Cholescystectomy; May 29, 1984, $375.00 Appendectomy. All of said services were performed by R. Klein Bowen, M.D. The State Group Health Self-Insurance Plan paid the charge for the cholescystectomy and denied the claims for consultation and case history preparation prior to the surgery and for the appendectomy. The State Self- Insurance Plan justified its denial of Petitioner's claim for the above benefits based upon limitations it alleged were contained in the State of Florida Employees' Group Health Self-Insurance Plan Benefit Document (Respondent's Exhibit 2). Section VIII entitled "Limitations" in paragraph I. specifies that payment may be made for in-patient medical care physician visits in addition to payment for surgery only when the condition which required medical care is not related to the surgery and does not constitute a part of the pre-operative or post-operative care. Additionally, Section VIII, F. specifies that no additional payment shall be made for a surgical procedure which is an incidental procedure performed through the same incision. Petitioner did not dispute the provisions which Respondent alleged were limitations justifying denial of payment, although he asserted that the provisions contained within the Group Health Self-Insurance Plan Benefit Document were not cost effective and would result in additional expenses and lost time from work and were worthy of reconsideration. However, Petitioner did not present any competent evidence to support his claim or refute the limitations relied upon by Respondent.
Recommendation Based on the foregoing, it is RECOMMENDED that Respondent enter a Final Order denying the Petition. DONE and ENTERED this 14th day of May, 1985, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of May, 1985. COPIES FURNISHED: Gerald B. Richardson 2909-198 South Semoran Boulevard Orlando, Florida 32822 Richard L. Kopel, Esquire Deputy General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Gilda Lambert, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
The Issue The issue at the hearing was whether Petitioner is entitled to a premium refund of her health insurance premium.
Findings Of Fact The Petitioner, Mildred Daw, is a retired State employee. She is enrolled in the State of Florida, State Employees Group Health Self Insurance Plan (the Plan). Prior to retiring, Petitioner amended her coverage in the Plan, changing from single coverage to family coverage. Petitioner modified her coverage so that her husband would be covered under the Plan. Petitioner's husband was under age 65 and qualified for Medicare Parts A and B. Petitioner was not qualified for Medicare coverage. The premium for family coverage was $178.44 per month. Petitioner began paying this amount shortly before she retired in December 1984. By letter dated, July 8, 1985, the Division of State Employees' Insurance notified retirees that: If you are under age 65 and eligible for Medicare Part A and B because of disability, you may now be eligible for Medicare Coordination coverage at the reduced rate. Please notify our office if you are eligible and send a copy of your Medicare card. Your premium will be reduced the month following our receipt of your notice and the copy of your Medicare card. The letter was sent to retirees and made no mention of surviving spouses or that a current spouse, who fit within the Medicare category, could qualify the insured for Medicare Coordination coverage. The Medicare Coordination coverage is the only program that the State offers in which it is the spouse of the insured/retiree who can qualify the insured for new benefits or different coverage. In this case, the different coverage or new benefit was solely a reduction in premium. Otherwise, the benefits under the family coverage and the Medicare Coordination coverage were the same. An ordinary person reading the letter would not have been placed on notice and would not have assumed that anyone other than the retiree was covered by the letter. If Petitioner had immediately elected the Medicare Coordination coverage, her premium would have been reduced by $42.76 a month, beginning with the August 1985, payment. The July 8, 1985, letter was mailed by first class mail to all retired State employees in the Plan. The business practice of the Division is to mail any such letters to the address of the retiree listed with the Division of Retirement and given to the Division of State Employees' Insurance or to the most current address the Division of Employees Insurance has for that particular retiree. In this case, the address which the Division of Retirement would have had on Petitioner in 1985 was her old address in Jacksonville. However, by July 1985, Petitioner had mailed the Division of State Employees' Insurance a change of address card with her new Pensacola address. She did not mail the Division of Retirement a change of address. There is no evidence as to which address the Respondent mailed the July 8, 1985, letter. Without such evidence Respondent is not entitled to a presumption of proper notice when a letter is mailed to a party with the correct address. Petitioner does not remember receiving the July 8, 1985, letter. She would have elected the Medicare Coordination coverage had she been aware of its availability. Petitioner became aware of her eligibility for reduced premiums in October 1987, when she received an informational bulletin from the Division of State Employees' Insurance. The bulletin stated the premium rates for various types of insurance coverage, including the reduced premiums for family coverage with members of the family who are qualified for Medicare benefits. Petitioner telephoned the Division and was instructed by Division personnel to send in a copy of her husband's Medicare card in order to establish her eligibility for the reduced premium. Petitioner sent a copy of her husband's Medicare card to the Division in October 1987. On November 6, 1987, Petitioner requested a refund of excess insurance premiums paid from July 1985, through November 1987. On December 28, 1987, Petitioner was informed by the Respondent that the earliest date a change in coverage could become effective was October 1987, because Petitioner had not applied for a change of coverage prior to that time. Petitioner was awarded an excess premium refund for the premium paid for November coverage. The Rules governing the Plan are found in Chapter 22I-1, Florida Administrative Code. This Chapter generally requires that an employee or retiree perform an affirmative act, by completing an informational form and sending it to the Department, before any change in coverage can be effectuated. The reason for such a requirement is that the Department has no way of knowing the number of eligible employees or retirees, without being supplied that information from the insureds, so that the Plan's administrator can better manage the Plan's funds to provide an adequate amount for the payment of claims. However, competing with this Rule is the Respondent's policy that a retiree who is otherwise eligible for certain benefits, but did not receive any notice of such eligibility is entitled to retroactive benefits. This policy is based on the Division's duty to administer the State's health plan, including notifying retirees of the availability of new types of coverage or benefits. The evidence showed that this policy takes precedence over the Rule when the Division has failed to notify an eligible retiree. In this case the Division failed to notify Petitioner of her eligibility for Medicare Coordination coverage due to her spouse's qualifications. Petitioner is therefore entitled to retroactive benefits beginning July 1985. Since the benefit of the Medicare Coordination coverage is a reduced premium, Petitioner is entitled to a refund of the excess premium of $42.76 a month from July 1985, through October 1987. The refund for that time period totals $1,154.52.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Administration enter a Final Order refunding to Petitioner excess premiums paid to the Department in the amount of $1,154.52. DONE and ENTERED this 18th day of July, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 18th day of July, 1989. APPENDIX TO RECOMMENDED ORDER CASE NO. 89-301 The facts contained in paragraphs a, b, c, d, e, f, g, h, i, j and k of Petitioner's Proposed Findings of Fact are adopted in substance, in so far as material. The facts contained in paragraphs l, m, and n of Petitioner's Proposed Findings of Facts are subordinate. The facts contained in paragraph p of Petitioner's Proposed Findings of Facts were not shown by the evidence. The facts contained in paragraph o of Petitioner's Proposed Findings of Fact are rejected. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 8, 9, 10, 11 and 12 of Respondent's Proposed Findings of Fact are adopted in substance, in so far as material. The facts contained in paragraphs 13 and 14 of Respondent's Proposed Findings of Fact are subordinate. The facts contained in paragraph 7 of Respondent's Proposed Findings of Fact were not shown by the evidence except for the fact relating to the letter being mailed first class mail. COPIES FURNISHED: Karren Lessard 15 West La Rua Street Pensacola, Florida 32521 Larry D. Scott Senior Attorney Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Andrew McMullian III Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue Whether Petitioner's claim against her state group health insurance company for services related to a Magnetic Resonance Imaging examination (MRI) should be granted or denied.
Findings Of Fact At all times material hereto, Petitioner was employed by the State of Florida and was a participant in the State of Florida group health insurance plan, which is a self-insured plan administered by the State of Florida in conjunction with the plan's third party administrator, Blue Cross Blue Shield of Florida (BCBSF). This plan is frequently referred to as the PPO Plan, an acronym for preferred provider organization. Prior to April 26, 2002, Petitioner's physician detected a lump in Petitioner's right breast. Petitioner's physician ordered mammography and ultrasound examinations to be performed on Petitioner's right breast. Those examinations were performed on April 1, 2002. Following those tests, Petitioner's physician ordered an MRI examination of the right breast, which was performed on April 26, 2002, and is the procedure at issue in this proceeding. Following that MRI, Petitioner had another mammography and ultrasound for the diagnosis and treatment of breast cancer. Respondent has paid Petitioner's claims for coverage of the mammography and ultrasound examinations. Respondent has denied payment for the professional fee associated with the MRI in the amount of $215.00. Respondent has paid the facility fee associated with the MRI in the amount of $1,705.00. Respondent asserts that the payment of that fee was in error and intends to seek reimbursement for that payment if it prevails in this proceeding. The terms of coverage of the state group health insurance plan are set forth in a document entitled "State Employees' PPO Plan Group Health Insurance Plan Booklet and Benefit Document" (Benefit Document). The Benefit Document (at page 31, paragraph 47 of the section entitled "Services Not Covered By The Plan") specifically excludes the following from coverage: 47. Services and procedures considered by BCBSF to be experimental or investigational, or services and procedures not in accordance with generally accepted professional medical standards, including complications resulting from these non-covered services. The Benefit Document has a section entitled "Definitions of Selected Terms Used By The Plan" beginning at page 49. The definition of the phrase "experimental or investigational services", found at page 51, includes, in pertinent part, the following: . . . any evaluation, treatment, therapy, or device that: * * * is generally regarded by experts as requiring more study to determine maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition has not been proven safe and effective for treatment of the condition based on the most recently published medical literature of the U.S., Canada or Great Britain using generally accepted scientific, medical or public health methodologies or statistical practices is not accepted in consensus by practicing doctors as safe and effective for the condition is not regularly used by practicing doctors to treat patients with the same or a similar condition The Benefit Document provides at page 51 that BCBSF and the Division of State Group Insurance determine whether a service is experimental or investigational. The testimony of Dr. Wood established that an MRI of the breast is experimental or investigational within the meaning of the Benefit Document. 2/ MRI examinations of the breast are not reliable diagnostic tools because such examinations result in an unacceptable number of cases where an MRI produces false negative findings that reflect the absence of cancer where cancer is, in fact, present in the breast. According to Dr. Wood, an MRI cannot be relied upon and should not be used to avoid a biopsy of a suspicious mass because a patient would run an unacceptable risk that the detection of cancer may be delayed or missed. Dr. Wood also testified that radiologists in Florida performing services for the state group insurance health plan have been informed of BCBSF's position. Petitioner's doctors did not inform her prior to the examination that the MRI examination would not be covered by her insurance plan.
Recommendation Based on the foregoing, it is RECOMMENDED that Respondent enter a final order denying coverage for the MRI claims submitted by Petitioner. DONE AND ENTERED this 17th day of February, 2003, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 2003.
